Will Under Armour’s Stock Outperform?

With shares of Under Armour (NYSE:UA) trading at around $50.87, is UA an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

The short position on this stock is over 19 percent, which makes about as much sense as flushing money down the toilet. Even if you think there is a feasible reason to short this stock, there is no doubt that an abundance of other stocks much more warrant a short position. You don’t need to be Agatha Christie to see where this is heading, but let’s take a look at some important facts anyway.

Q4 revenue came in at $506 million, which was a 25 percent increase year-over-year. Q4 EPS was $0.47, which was a 51 percent increase year-over-year. FY2012 revenue was $1.85 billion compared to $1.47 billion in 2011. FY2012 EPS was $1.21 compared to $0.93 in 2011. As far as guidance goes, the FY2013 net revenue range is between $2.20 billion and $2.22 billion. Operating income will be $255 million to $257 million.

Q4 apparel net revenue was up 25 percent year-over-year. Q4 footwear net revenue was up 43 percent year-over-year. Q4 accessories revenue was up 16 percent year-over-year. Under Armour has also now shown revenue growth of at least 20 percent for 11 consecutive quarters.

Q4 Gross Margin was 50.3 percent versus 51.6 percent for the same quarter last year. This had to do with a less favorable sales mix and higher air freight costs. That said, it’s not a significant difference and shouldn’t weight on anyone’s investing decision.

Based on the numbers above, why would anyone want to short this stock? It’s understood that this information is only based on one report. Therefore, we will also look at the bigger picture.

Let’s take a look at some important numbers prior to forming an opinion on the stock…